On Tuesday Microsoft released earnings after hours that showed cloud growth continuing to expand but most other areas of the company’s revenue streams showed slowing growth. Overall the company still managed to come close to expectations but showed the slowest growth in the reported quarter in 6 years. The stock moved higher though, perhaps partly as a relief rally that earnings were not as bad as analysts were expecting. This will be the main focus of investors in the morning and while the stock moved higher after hours, we will probably see some weakness on Wednesday after any initial bounce. That weakness could bleed over into the overall market and see a lower or sideways day.
On Tuesday stocks spent most of the day wandering sideways but managed to close still above the 200 day moving average and down just a couple of points. The S&P closed at 4017. The NASDAQ slipped just 30 points by the close to 11,334. Volume on the S&P was anemic at just 3.4 billion but the NASDAQ saw 6 billion shares trade hands as investors continue to try to decide if this is the start of a move higher for the NASDAQ or whether to take profits and raise cash.
Let’s review the closing technical indicators from the SPX on Tue Jan 24 to see what to expect for Wed Jan 25.
Stock Market Outlook Chart Comments At The Close on Tue Jan 24 2023
On Tue Jan 24 2023 the S&P did dip down to the 200 day moving average but spent the day above it. This is bullish.
The closing candlestick is bearish for Wednesday and shows that a dip below 4000 should be expected.
The Upper Bollinger Band is continuing to rise which is bullish. The Lower Bollinger Band is starting to turn lower which at present is still bullish but needs to be watched.
The 200 day moving average is falling which is bearish but all the remaining moving averages are rising. This includes the 21, 50 and 100 day moving averages. This is bullish. The 21 day is rising rapidly and may cross above the 100 and the 50 day shortly. That would be a major up signal.
At present there are are 5 down signals in place since April 24 and one up signal.
The chart is 60% bearish for Wednesday which is higher than from Tuesday.
Stock Market Outlook review of Tue Jan 24 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday Jan 9. The up signal gained more strength on Tuesday as did the histogram.
- Settings: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9.
Ultimate Oscillator: The Ultimate Oscillator is rising and positive.
- Settings: The Ultimate Oscillator settings are: Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months.
Slow Stochastic: The Slow Stochastic has a strong up signal in place and is starting to move back toward overbought readings.
Settings: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day.
Relative Strength Index: The RSI signal is unchanged and positive.
- Settings: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It is often the first indicator to show an overbought or oversold signal.
Rate of Change: The rate of change signal is falling and positive. It is signaling that the strength of the rally could be slowing, again. Investors will know more on Wednesday after the close when the readings are done.
- Settings: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. With the Rate Of Change, prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline.
Support and Resistance Levels To Be Aware Of:
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is resistance
3965 is light support
3950 is light support
3930 is light support
3900 is light support
3875 is light support
3850 is good support
3830 is good support
3810 is light support
3800 is good support
3775 is good support
3750 is good support
3730 is light support
3725 is light support
3715 is light support
3700 is good support
3685 is light support
Stock Market Outlook for Tomorrow – Wed Jan 25 2023
The technical signals gained more strength on Tuesday. The chart thought is 60% bearish for Wednesday with a lot of sideways action expected.
Microsoft earnings were a major concern of a lot of investors. Earnings were better than expected but definitely show that overall, the company’s growth is slowing. This could weigh on stocks.
The rate of change is a concern as it is dropping back. Often this is a signal that a move in the market that was underway is losing strength.
Wednesday is more important than Tuesday as now that Microsoft earnings are out, we need to see investors push the stock higher on good volume. Otherwise the rally will begin to run into pockets of weakness. There are many stocks reporting earnings today and more tomorrow. Earnings so far are better than analysts had predicted but not overly so.
New 52 week highs are continuing to outpace new lows which is a good sign for the bulls.
For Wednesday there will be dips and the close should see the S&P index flat to lower as investors digest the Microsoft earnings report.
Potential Economic and Political Market Moving Events
There are a number of events this week that may impact stocks. For Wednesday there are no economic reports.
Tuesday:
9:45 S&P manufacturing PMI came in slightly higher than expected at 46.8.
9:45 S&P services PMI came in higher as well at 46.6
Stock Market Outlook Archives
Stock Market Outlook for Fri Apr 26 2024 – Higher and Positive Close
Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
